Weekly Economic Update

For the week August 18 – 22, 2014

In Canada this morning, International Securities Transactions have released at -1.07B for June, below expectations of 5.00B. Global Investors cut their holdings of Canadian government bonds by a record in June as they dropped a total of $9.42 billion from sales and maturities. Later today, the Bloomberg Nanos Confidence Index will update for the period ending August 15, 2014 after releasing at 58.6 in the most recent update. The Confidence Index has fallen in the last three weekly updates. It is quiet south of the border with only one release on the schedule this morning. The NAHB Housing Market Index is forecast to remain at 53 for June. A reading above 50 on the Index suggests that more builders view conditions as good than poor.

Headlines throughout Canada this week include updates to the Consumer Price Index and Retail Sales data, both scheduled to release Friday, August 22. The CPI is forecast to remain unchanged on a month over month basis and Retail Sales are expected to show a gain of 0.3%. Following last week’s upward employment revision, strong CPI data this week could provide optimism going into the next Bank of Canada meeting scheduled for early September.

Throughout the United States this week, focus falls on the CPI and Housing Starts updates scheduled to release tomorrow followed by Existing Home Sales on Thursday. The CPI is forecast to show a gain of 0.1% on a month over month basis while Housing Starts are expected to show a gain of 8.1%. The next Federal Reserve Announcement is schedule for September 17, 2014, but this week’s CPI data will play a key role in the decision. Employment data and CPI data are often regarded as the two most important pieces of economic data that factor into the rate decisions.

In the currency markets, the Canadian dollar has continued to gain against its U.S. counterpart in early trading this morning following the revised employment data on Friday. Investors will be looking towards the CPI data out of the United States as the next piece of major economic data. It could be a volatile week in CAD trading with multiple pieces of economic data on the schedule with potential to impact the CAD/USD trading range.

Todays expected range: 1.0836 – 1.0936

Source: Bloomberg

Posted by Concentra Financial Markets

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